Silver Chartbook - Silver, The Race Is On

Summary

• Silver seems to be a good insurance play for wealth preservation.
• A closer inspection of the monthly chart provides compounding evidence of the long-term bullish trend in Silver.
• Short-term, Silver might provide one more low-risk entry spot in the early days of next week.
• Historically, Silver never got prohibited. Hence, it seems to fit the bill the best, both in wealth preservation and wealth creation.

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Russia now holds more value of Gold (XAUUSD:CUR) in its reserves than US-Dollar! Russia reduced its dollar holdings by nearly 50% within the last three years. We find this strong evidence of currency devaluation over a more extended period. This warrants insurance to be purchased over your fiat currency holdings. Time is not on your side. We have seen governments in various countries reduce legal maximum purchase sizes for precious metals consistently over the years. Grab it while you can.

Official records show the US owns some 8,133 tonnes of Gold. While the official number of China's holding is lower, a fair guestimate is that China holds roughly 14,500 tonnes.

Fintech and IT Benchmarks 2021 research found that nine in ten central banks are feverishly working on digital currencies. Who will have immediate trust to exchange all their currency nest eggs in a brand new technology? Even Bitcoin, which has proven itself in its ‘sector,’ is allocated not more than one to fifteen percent in the most progressive funds.

It can also be assumed that China, which has been working on digital currencies since at least 2014, has the most advanced development in its projects. Meaning we could expect a possible shift in world power.

These and many more facts point towards a physical acquisition of Silver (XAGUSD:CUR) at recently reduced prices in the Silver market to be a good insurance play for wealth preservation. Buying the Sprott Physical Silver Trust (PSLV) is a good alternative, too. But we continue to stay away from the iShares Silver Trust ETF (SLV).

Silver in US-Dollar, Daily Chart, What has happened since last week?

Silver in US-Dollar, daily chart as of July 30th, 2021.

We posted the grey section of the daily chart above in last week's chartbook publication with the following text: “We have strong resistance above us (red horizontal box). In addition, the yellow line represents the simple 200-moving average. Probably the most observed moving average, and as such significant in technical analysis. Consequently, we expect prices to decline from there and providing a low-risk double bottom entry near the US$25 level. This would allow the reader ample time to compare their findings. Compare your charts and trading system with our approach to plan a possible trade setup. We are fully transparent and as such, feel free to ask questions in our free Telegram channel.”

Prices followed precisely our anticipated moves and allowed us to post real-time in our Telegram channel a daily (at US$24.53 on July 27th and a weekly on July 28th at US$25.175 trading signal to go long the Silver market. Fear not; this doesn’t mean you missed the boat if you weren’t able to enter the Silver market just yet.

Let us have a look at the weekly setup and possible entry points:

Weekly Chart, Silver in US-Dollar, Low-risk entry:

Silver in US-Dollar, weekly chart as of July 30th, 2021.

If you look at the weekly chart above, you will find a trade entry near US$25, offering a long setup with enough room towards US$26 to get the trade financed (risk-free, see our quad exit strategy). Though the price struggles at US$26 (see the fractal volume analysis histogram showing a distribution zone near that price zone), we are confident this entry is worth a shot.

What can also be found is a very similar oscillator divergence (b) like last time price touched the up-sloping green trend-line (a). While price moved down, the turbo (yellow line on Commodity Channel Index) went up. In addition, the stochastic (with setting five) also shows similarly oversold slightly below the 20 reading (green circles).

Evidence supports that price might retest the price zone near US$25 with the next weekly candle opening. This allows again for a low-risk weekly entry should you not be positioned yet. Hence, it's prudent to watch the early days next week for a possible low-risk entry spot.

Silver in US-Dollar, Monthly Chart, The big picture, Silver, The race is on:

Silver in US-Dollar, monthly chart as of July 30th, 2021.

A closer inspection of the monthly chart provides compounding evidence of the long-term bullish trend in Silver and iShares Silver Trust ETF as well as the Sprott Physical Silver Trust. Recent price development for a possible turning point is supported through multiple technical analysis facts:

• Price bounced from a harmonic Fibonacci level.
• Price bounced from the 15-simple moving average, which is a significant average for this time frame (bright green line).
• Bears are struggling to force prices lower after a significant double top near US$30.
• A sequence of higher price lows along the mid-line of the Linear Regression channel (blue line) warrants a bullish tone after the significant up-leg from US$11.64 March 2020 to US$30.09 this year.

With this much evidence of a possible second leg up being underway for much higher price levels than smaller time frames illustrate we are aggressively buying into lower time frame low-risk entry opportunities.

Silver, the race is on:

We have no clue how governments will try to hold on to monetary control and power. History shows that they always had a trick up their sleeves like confiscation (this is why we prefer Silver over Gold and also over the Sprott Physical Gold Trust (PHYS) since Silver is less likely to become an illegal commodity to be owned).

We rather avoid the risk based on “the early bird catches the worm.” Bitcoin (BTC-USD) carries the risk of becoming unlawful since it is relatively new in the mix. Gold is so highly-priced that soon even small denominations will become less accessible for everybody. Silver, as of now, seems to fit the bill the best, both in wealth preservation and wealth creation.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of XAG-USD either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.